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This study uses a boundary design and propensity score methods to study the effects of the 1930s-era Home Owners Loan Corporation (HOLC) “redlining” maps on the long-run trajectories of urban neighborhoods. The maps led to reduced home ownership rates, house values, and rents and increased racial segregation in later decades. A comparison on either side of a city-level population cutoff that determined whether maps were drawn finds broadly similar conclusions. These results suggest the HOLC maps had meaningful and lasting effects on the development of urban neighborhoods through reduced credit access and subsequent disinvestment. (JEL G21, J15, N32, N42, N92, R23, R31)

Purpose: This paper systematically reviews a reappraisal of the relationship between consumer behavior and credit card debt. Methodology: A thorough search was performed using scholarly databases including EBSCOHost, Google Scholar, Wiley Online Library, JStor, ProQuest, and Taylor & Francis. After a vigorously screening process, a total of 77 articles were accepted with the majority (96%) of articles published after 2012. Several consumer behavior factors were considered such as social factors, psychological factors, impulse buying, compulsive buying, optimism and pessimism, risk-seeking, mental health, age, income, education, immigrants, religion and financial literacy. Findings: Overall, influential factors that contribute to credit debt can be attributed to redlining and predatory lending by financial institutions. Racial inequalities have been shown to play a significant role in credit debt, especially in the UK. Unique contribution to theory, practice and policy: A major knowledge gap concerning immigrants exists and further provide insight on the role played by an individual’s ethnic group in the rate of home equity decline as well as the overall net wealth of a household, ultimately affecting their credit debt. It would be useful for policy-makers to examine the biased placed on credit debt and social-economic backgrounds.

Problem, research strategy, and findings: Historical patterns of discrimination and disinvestment have shaped the current landscape of vulnerability to heat in U.S. cities but are not explicitly considered by heat mitigation planning efforts. Drawing upon the equity planning framework and developing a broader conceptualization of what equity means can enhance urban heat management. Here I ask whether areas in Baltimore (MD), Dallas (TX), and Kansas City (MO) targeted for disinvestment in the past through practices like redlining are now more exposed to heat. I compare estimates of land surface temperature (LST) derived from satellite imagery across the four-category rating system used to guide lending practices in cities around the United States, summarize the demographic characteristics of current residents within each of these historical designations using U.S. Census data, and discuss the connection between systematic disinvestment and exposure to heat. LST and air temperatures are not equivalent, which makes it difficult to reconcile existing research on the human health impacts of heat exposure that rely on a sparse network of air temperature monitoring stations with more granular LST data. Areas of these cities that were targeted for systematic disinvestment in the past have higher mean land surface temperatures than those that received more favorable ratings. Poor and minority residents are also overrepresented in formerly redlined areas in each of the three study cities. Takeaway for practice: By examining areas that have experienced sustained disinvestment, cities may be able to more quickly narrow the focus of heat mitigation planning efforts while furthering social equity. Efforts to mitigate the negative impacts of rising temperatures in U.S. cities must be tailored to the local climate, built environment, and sociodemographic history. Finally, geospatial data sets that document historical policies are useful for centering and redressing current inequalities when viewed through an equity planning lens.

While undergraduate student loan debt continues to be “hard to register,” there are other conditions and effects of the student loan debt spiral that remain relatively invisible, unexamined, and certainly receive less attention in news headlines or on the op-ed pages about the fiscal cliff of education debt. These are the effects of this debt spiral on graduate education, faculty composition, and knowledge production itself. This article highlights how the debt load of faculty is part of the current student loan debt spiral, yet its effects on the working conditions of faculty, the learning conditions of students, and, importantly, the production of knowledge in the university remain underexamined.

Homeownership is often considered the lynchpin of the “American Dream.” The largest asset in the portfolio of the typical American household is a house, which is most often financed by a mortgage loan. Thus, homeownership via the mortgage market has significant implications for wealth-generation and other long-term benefits, including improved educational and health outcomes, safer communities, and tax advantages. For these reasons, homeownership is subsidized by the government and supported by a complex housing finance system supported by domestic and international investors. Due to racism, discrimination, historical inequality, and the disparate impact of certain public policies over time, Black and Latinx households have had far fewer opportunities to accrue the benefits of homeownership than their White counterparts, and homeownership rates for Blacks and Latinx households in the USA remain significantly lower than those of White Americans. This chapter focuses on the cumulative disadvantages of race and racism in mortgage lending requirements and the ways in which these impediments undergird a persistent wealth gap that can only be offset by substantial changes to the market system.

Part 1 Mortgage lending discrimination: An overview, John Goering, Ron Wienk Discrimination in mortgage lending - a literature review, John Yinger Accounting for racial differences in housing credit markets, Robert B. Avery et al Turning a critical eye on the critics, Geoffrey M.B. Tootell The role of FHA in the provision of credit to minorities, Stuart A. Gabriel Race, redlining, and residential mortgage defaults - evidence from the FHA-insured single-family loan programs, James A. Berkovec et al Mortgage discrimination and FHA loan performance, James A. Berkovec et al comparing loan performance between races as a test for discrimination - a critique of the Barkovec et al study, George Galster Flaws in the use of loan defaults to test for mortgage lending discrimination, Stephen L. Ross Rejoinder, James A. Berkovec et al Discrimination and the secondary mortgage market, Robert Van Order Housing discrimination and the appraisal industry, Robert G. Schwemm. Part 2 Fair lending enforcement: An overview, John Goering, Ron Wienk The Decatur federal case The Decatur Federal case - a summary report, Richard Ritter Use of statistical models to provide statistical evidence of discrimination in the treatment of mortgage loan applicants - a study of one lending institution, Bernard R. Siskin, Leonard A. Cupingood Comments and responses by Decatur Federal savings and loan association, Kent B. Alexander Targeting a lending discrimination investigation, Ann Chud, Hal Bonnette Methods for identifying lenders for investigation under the Fair Housing Act, Ira J. Goldstein Fair lending management - using influence statistics to identify critical mortgage loan applications, David Rodda, James E. Wallace A practical model for investigating mortgage lending discrimination by financial institutions, Richard W. Cole Reviewing loan files for mortgage lending discrimination, Zina Gefter Greene The role of private, nonprofit Fair Housing enforcement organizations in lending testing, Shanna L. Smith, Cathy Cloud Preapplication mortgage lending testing program - lender testing by a local agency, Rachel Lawton The Chevy Chase case Patterns of residential mortgage activity in Philadelphia's low- and moderate-income neighbourhood - 1990-91, Paul S. Calem. Part 3 Future directions: Future directions in Mortgage discrimination research and enforcement, George Gaster.

Multiple studies document both the scarcity of small-business financing in inner-city minority communities and the higher loan application rejection rates among minority business enterprises (MBEs), compared with equally creditworthy White-owned firms. When MBEs do receive bank financing, they get smaller loans than Whites. Two aspects of these findings are troublesome. First, urban MBEs are heavily concentrated geographically in minority communities, raising the issue of whether difficulties accessing financing reflect firm location, minority ownership, or both. Second, applicable studies rest on weak theoretical foundations. The authors’ findings suggest that banks engage in discriminatory practices limiting credit availability to MBEs. Controlling for risk factors, however, firm location in a minority or inner-city neighborhood has no apparent impact on loan availability or size. Owner race/ethnicity, in contrast, is important. Subtle processes discourage MBEs from seeking bank loans. Owner race and wealth both powerfully shape loan access: high wealth opens doors, minority ownership closes them.

Theories of rational redlining suggest thinness in housing markets should lead to greater uncertainty in house price appraisals, increasing mortgage denial rates or pricing. Empirical tests found support for this theory in mortgage underwriting using 1990s data. Using 2006 data and bank-specific regression models, we revisit this topic in light of two developments leading to the recent mortgage bubble: the widespread securitization that allowed banks to shift loan risk to investors and the advent of risk-based pricing. Consistent with expectations, we find that information externalities have become economically very small and have shifted from underwriting to pricing decisions.

In this paper, I build on previous historical studies that have analyzed the lending activities of the Homeowners’ Loan Corporation (HOLC), a New Deal agency established in 1933 to mitigate the national mortgage foreclosure crisis caused by the economic fallout of the Great Depression. I investigate whether discriminatory lending practices took place in Greater Cleveland, Ohio. I also examine a second question related to the contemporaneous impact of HOLC lending: did lending actually decrease Depression-era foreclosure rates in areas of significant lending activity? Census tract-level ordinary least squares, two-stage least squares, and spatial regression models are estimated to answer these questions. While studies of the HOLC in other cities (including Philadelphia, Pittsburgh, St. Louis, and Chicago) have attempted to assess the possibility of discriminatory lending outcomes, their findings have remained inconclusive. In addition, previous studies have not assessed the HOLC’s practical success, especi...

Residual, de facto segregation is among the most enduring barriers to equal opportunity in America. Nearly five decades after the Fair Housing Act of 1968, Blacks and Latinos still tend to live in neighborhoods where the majority of residents are people of color. Such racial segregation is often accompanied by economic segregation. Meanwhile, sociologists, housing law scholars, and poverty law experts have stressed the importance of residential location to the impact of poverty and the potential for upward economic mobility. But an unlikely source of federal housing law—the tax code—may interfere with efforts to promote more integrated communities. This Article argues that federal tax law rewards White-flight and economic segregation and, as a result, may exacerbate the enduring effects of past policies like redlining and exclusionary zoning, while also limiting the effectiveness of non-tax federal programs intended to promote housing choice, such as the Section 8 tenant voucher program. The Article begins by using publicly available data from the Internal Revenue Service and the Department of Housing and Urban Development to map the flow of mortgage interest deduction benefits and the location of low-income housing tax credit properties in a representative city, Philadelphia. Next, the Article uses thought experiments to demonstrate how features of the tax law create monetary incentives to reinforce the segregation patterns reflected in the spatial distribution of these tax-subsidies. Finally, the Article sets forth recommendations for tax policy reforms that would better promote integrated communities.

This study examines the current status of the entry behavior of Internet Protocol TV (IPTV) into the video programming service market, with a particular focus on income redlining and local competition. Analyzing previously unavailable data on telecommunication companies' introduction of IPTV services into Indiana, this study found that although IPTV's entry into the state increased the local competition between cable and IPTV, this local competition was mostly confined to higher income areas due to the income redlining tendency associated with IPTV's entry. These empirical findings raise the issue of the recent deregulation policy reforming cable franchising rules, whose goal was to promote local competition but which might insufficiently reflect the public interest, especially for low-income households.

The 1977 Community Reinvestment Act (CRA) established a bold agenda requiring financial institutions in the USA to serve the credit needs of low- and moderate-income areas, including traditionally excluded minority residential areas. Initially opposed by both bankers and the federal regulatory authorities responsible for enforcement, the CRA has been contentious for decades. This study explores CRA impacts by investigating whether small businesses located in minority neighbourhoods have the same degree of bank-loan access as equally creditworthy firms located in other environs. We analysed both the unmet credit needs of small firms and the outcomes of their loan applications. We found that equality in loan access has been attained in some respects, indicating the CRA has had positive effects on loan availability. Inequality nonetheless persists. Regarding unmet credit needs, firms are penalised if their owners are African American, Latino or Asian American. Since roughly half of owners in minority communities are minorities, our challenge was to disentangle the effects on loan access of small-business geographic location versus owner race. Causal factors underlying our findings were investigated. Did bank regulators take the initiative in lessening traditional discriminatory lending practices? Alternatively, were activist community groups responsible? While the agenda advocated by activist groups coincides closely with actual gains, the overlapping but differing stated objectives of regulators did not.

Using archival data and oral histories, this paper describes the community reinvestment movement in Washington, DC from 1970 until 1995. Though the movement began as isolated private advocacy in the early 1970s, it helped pass key pieces of federal legislation, such as the Home Mortgage Disclosure Act (HMDA) and the Community Reinvestment Act (CRA). The DC government responded to both redlining and gentrification with a suite of community development legislation designed to extend credit based on social needs, to increase homeownership via a homestead housing program, and to mitigate displacement due to gentrification with tenant right-to-purchase legislation. Additionally, DC's reinvestment movement is unusual in that the city government used an interstate banking law to force reinvestment in the 1980s and early 1990s. Furthermore, the paper describes class-based barriers to reinvestment within the African American community including petty corruption amongst mortgage bankers and real estate brokers, corruption that foreshadowed exploitation during the sub-prime era. The paper concludes with a discussion of how the DC reinvestment movement took advantage of political opportunity structure, using advocacy and research to effect reinvestment because of successful venue-shopping. This work fills specific gaps in the literature, to include DC's role in the writing of CRA and HMDA, qualitative evidence of the effects of redlining, the use of interstate banking laws for reinvestment, and class issues within the African American community in the context of reinvestment.

This article explores why and how homeowners in Bedford-Stuyvesant, Brooklyn, New York, took out subprime mortgage loans, and the effect of these loans on individuals and their community. It analyzes real estate histories for properties on four street blocks in Bedford-Stuyvesant by linking public data for real estate transactions with homeowners' descriptions of those transactions, gathered through interviews. Subprime lending flourished in a neighborhood that historically was redlined by conventional lenders, and created and exacerbated poverty, as it stripped equity from individuals and the neighborhood. Many homeowners in the study managed to combat this process of becoming poor, however. Homeowners are averting foreclosure while making sacrifices that are not apparent from data for mortgage foreclosures, neighborhood appearance, or initial conversations with residents and community leaders. Longtime homeowners' personal and neighborhood narratives of upward mobility and stability remain sacrosanct an...

Besley and Coate (1995) analyse the impact of joint liability and social sanctions on repayment rates when repayment enforcement is imperfect. Motivated by the microfinance industry’s move towards markets, we conduct an equilibrium analysis of the Besley–Coate model. We find that individual loan contracts may be used in market equilibrium, even though group lending entails the higher repayment rate and the lower break-even interest rate. This is because group lending causes potentially large deadweight losses. The market equilibrium is possibly characterised by financial fragility, redlining or rationing. Cooperation between borrowers and social sanctions imposed on each other in the case of strategic default turn group lending into the equilibrium mode of finance and ameliorate the market failures. JEL Classification: G21

The Great Depression led to dramatic changes in financial regulation and home financing. Policymakers opted for insurance programs—deposit guaranty and mutual mortgage insurance—as safe and stable ways to manage the critical financial sector. An analysis of data collected in support of the Residential Security Maps of the Home Owners’ Loan Corporation shows that the age, upkeep, and price of housing along with mortgage availability are robust predictors of mortgage risk in these maps while the presence of non-white and foreign-born residents represent more modest estimators of mortgage risk. The system of mortgage insurance established in this period sowed the seeds of center city economic deterioration.

This study uses a combination of six Survey of Consumer Finances data sets to examine whether factors affecting credit delinquency differ by the racial/ethnic identity of households. Hispanic households are less likely than white households and white households are less likely than African American households to be delinquent. Our full model with interaction terms shows that the effects of financially adverse events, financial buffers and debt burden on the debt delinquency differ across racial/ethnic groups. Combining African American and Hispanic households into one racial/ethnic minority group as previous studies have done can be problematic. ********** Attention to racial/ethnic minorities' credit acquisition dates back at least to the 1970s (Canner and Smith 1991). Public policy goals have included increasing racial/ethnic minorities' access to credit by eliminating discrimination (Anderson and VanderHoff 1999), and redlining and racial/ethnic preference in credit lending have been investigated (Canner, Gabriel, and Woolley 1991). Racial/ethnic differences in borrowing opportunities and access to credit have been also discussed in empirical literature (e.g., Anderson and VanderHoff 1999; Munnell et al. 1996; Scharfer and Ladd 1981; Tootell 1996). Financial innovation has relaxed credit constraints of households and has provided affordable and easily accessible credit to most Americans (Greenspan 1997). As a result, it has been much easier for households traditionally constrained by the credit market, including racial/ethnic minorities, to take on debt and consume more than income (Lyons 2003). With increases in credit usage of racial/ethnic minorities, higher rates of debt payment problems by African Americans and Hispanics have continued and constitute the most consistent finding across previous studies (e.g., Anderson and VanderHoff 1999; Berkovec and Gabriel 1995; Canner, Gabriel, and Wolley 1991; Getter 2003; Godwin 1999; Sullivan and Fisher 1988; Volkwein et al. 1998). The default rate for African American households was significantly higher than that for white households, even after controlling for household characteristics (Anderson and VanderHoff 1999). African Americans were also twice as likely to lose their homes due to foreclosures as whites (Warren and Tyagi 2004). More recently, African Americans and Hispanics suffered excessively in the subprime crisis (Rivera et al. 2008). Rising household debt payment problems are a concern since they influence other aspects of household finances negatively. Late debt payment is recorded on credit reports, often resulting in lower credit scores. These credit reports are then used to determine the level of risk associated with most loans or insurance. Household debt payment problems can affect access to credit or homeownership. Racial/ethnic minorities without the economic cushion provided by household wealth face severe economic hardships due to household debt problems. In addition, prospective employers may use credit reports in choosing between job candidates (Manning 2001; Scott 2005). The household credit literature has long suggested that there exist racial/ethnic disparities in debt payment performance. Nevertheless, a rigorous analysis of payment performance with attention to borrowers' race/ethnicity is lacking. Previous studies on this issue are limited in two aspects. First, most previous studies combined racial/ethnic groups, especially African American and Hispanic households and then compared these to white households or perhaps a combination of white and "other" households. Combining African American and Hispanic households has been done presumably because the number of credit problems of each racial/ethnic group for any single survey year used in those studies is relatively low, although as Lindamood, Hanna, and Bi (2007) noted, many authors have not offered explanations for combining racial/ethnic groups. …

By utilizing the annual reports of the Federal Home Loan Bank Board (FHLBB) and its monthly journal, the Federal Home Loan Bank Review, this essay argues that the incorporation of the Home Owners’ Loan Corporation’s appraisal scheme had several detrimental consequences. By mandating their appraisal analysis as a prerequisite for membership into the federal banking system, the FHLBB established unified national lending standards designed to evaluate neighborhood demographics as a factor far exceeding the condition of the appraised property itself. With the inclusion of these “scientific appraisal standards” into their uniform lending policies, FHLBB officials rated entire residential communities as hazardous bank investments whenever they were inhabited by undesirable occupants. Ultimately, the standardized lending policies of the FHLBB systematically disadvantaged low-income and minority city-dwelling residents from obtaining mortgage financing, and by midcentury they exacerbated the disproportionately substandard urban housing conditions endured by nonwhites in the United States.

This paper evaluates the presence of racial disparities in the issuance of consumer credit. Using a unique and proprietary database of credit histories from a major credit bureau, this paper links location-based information on race with individual credit files. After controlling for the influence of such other place-specific factors as crime, housing vacancy rates, and general population demographics, the paper finds qualitatively large differences in the amount of credit offered to similarly qualified applicants living in Black versus White areas. An instrumental variables approach allows the paper to distinguish between issuer-provided credit (supply) and utilization of credit (demand), where instruments for demand are derived from social theory à la Veblen (i.e., `keeping up with the Joneses'). The results suggest that the observed differences in credit lines by racial composition of neighborhood are largely driven by issuer decisions rather than by demand.

Municipal bond ratings give investors information about bonds' default probabilities. They also affect societal objectives by altering the cost of public infrastructure but are not regulated. This paper explores the possibility that these ratings involve behavior analogous to redlining, which is discrimination against people in places with a high minority composition. Drawing on our civil rights laws, the paper develops a regulatory framework to balance societal objectives with a rating agency's business interests. An application to the ratings of cities' general obligation bonds finds evidence suggesting redlining-type behavior. This analysis supports the need for regulation of municipal bond ratings. Copyright 2009, Oxford University Press.

Economic growth in the United States has historically bypassed many minorities and low-income communities. Some researchers and community advocates assert that the deterioration of these communities is in part caused by financial institutions' redlining and neglect. To rectify the situation, the government introduced the Community Reinvestment Act (CRA) for the purpose of encouraging banks and saving institutions to become more socially responsible and help meet the credit needs of communities in which they are located. The CRA was the government's response to bank lending discrimination. However, when passing the Act, Congress was equally concerned with reversing or at least halting disinvestment from inner-city communities and in turn revitalizing local economies. Many believe that the availability of credit to establish, refinance, and improve small businesses is critical to the well-being of local communities. Therefore, through the provision of small business loans, the CRA could be envisioned as a catalyst toward achieving that goal. Thus the aim of this paper is to investigate potential relationship between banks' CRA lending activities, and new business start-ups and economic growth in local markets. The paper proposes that new start-ups will have spillover effects that will consequently contribute to community development. After controlling for several potential variables that could have an impact on business start-ups and community developments, the study found a strong positive effect. Beside its social and economic implications, the study also considered policy implications associated with the CRA regulation as a welfare improving initiative in low-income communities. It offers ground for certain government intervention in the loan market. Introduction Many communities in the United States have been plagued with chronic poverty, unemployment, unskilled labor force, high crime rate, and poor infrastructure (Somaya 1996). Their lagging development has had an adverse effect on economic growth (Matasar and Pavelka 2004). Many believe, however, that corporations can play a revitalizing role especially in inner-city communities where exist the greatest concentration of social problems and the greatest proximity to the corporate sector (Porter 1995). One industry that has historically been associated with creating or exacerbating some of these problems is the banking industry (Matasar and Pavelka 2004). Some researchers and community advocates assert that the deterioration of inner cities is in part caused by banks neglecting their local and low-income communities (Canner and Passmore 1995a). In 1977, motivated by mounting concerns and perceived shortfalls in banks' investment in inner-city communities, the government introduced the Community Reinvestment Act (CRA). The Act required all federally regulated banks to demonstrate that they served the convenience and credit needs of their entire communities, including low and moderate-income neighborhoods and minority customers (Johnson and Sarkar 1996). Since its introduction, the CRA has attracted many opponents who criticize it by arguing that it forces banks to engage in unprofitable and unsafe investment practices in order to gain favorable regulatory evaluation (Lacy and Walter 2002; Macey and Miller 1993). However, it has also attracted many supporters who defend it by arguing that the shortage of capital in inner-city neighborhoods is a major stumbling block for any investment activities and cite "redlining" (1) by banks and financial institutions as a significant factor (Etsy 1995; Porter 1995). These supporters consider the CRA a necessary regulation in order to influence banks' services and investment in deteriorating inner-city communities. The above debate about the CRA has been ongoing for the last 30 years. It has been sustained by the differences of opinions regarding the costs and benefits of the regulation (Barr 2005) and exacerbated by the lack of empirical research evaluating its impact (Hylton 2000). …

ijur_873 291..313 Despite decades of government reform, the American housing credit system continues to mirror long-standing patterns of racial segregation and inequality. Consistent with this trend, the current housing crisis reveals an unusually high concentration of subprime mortgage activity and property foreclosures in non-white residential settlements across the nation. Given the generally accepted premise of market neutrality, this case study of lending patterns in Sacramento, California, questions why US housing market exchanges continue to produce racially disparate outcomes and seeks to identify the ideological practices in which race is deployed, informs state and private economic action and shapes contemporary credit market practices.

This paper develops a political economic explanation of the 2007–9 US subprime crisis which focuses on one of its central causes: the transformation of racial exclusion in US mortgage-markets. Until the early 1990s, racial minorities were systematically excluded from mortgage-finance due to bank-redlining and discrimination. But, then, racial exclusion in credit-markets was transformed: racial minorities were increasingly given access to housing-credit under terms far more adverse than were offered to non-minority borrowers. This paper shows that the emergence of the subprime loan is linked, in turn, to the strategic transformation of banking in the 1980s, and to the unique global circumstances of the US macro-economy. Thus, subprime lending emerged from a combination of the long US history of racial exclusion in credit-markets, the crisis of US banking, and the position of the US within the global economy. From the viewpoint of the capitalist accumulation-process, these loans increased the depth of the financial expropriation of the working class by financial capital. The crisis in subprime lending then emerged when subprime loans with exploitative terms became more widespread and were made increasingly on an under-collateralised basis – that is, when housing-loans became not just extortionary but speculative.

We examine the gap in broadband access to the Internet between minority groups and white households with geographically fine data on DSL subscription. In addition to income and demographics, we also examine quality of service and competition as components of the Digital Divide. The gaps in DSL demand for blacks and Hispanics do not disappear when income, education, and other demographic variables are accounted for. However, lack of competition is an important driver of the Digital Divide for blacks. Service quality is an important determinant of demand, and ignoring it masks the true size of the DSL gap for Hispanics.

Credit discrimination in the US has been a topic of considerable interest over the past few decades. This paper examines the lending behaviour of a commercial depository institution with respect to unsecured consumer loans in minority versus non-minority US census tracts. In contrast to previous studies, the data include information about applicants' credit scores and marginal exceptions to loan policy. In a logit model of the probability of denial, no evidence of discrimination is found for overall loans or when an application is turned down even when a minimum credit score is reached. The evidence of non-discrimination is not as clear for applications that were approved despite falling short of minimum credit scores or applications that barely met the minimum score but were turned down. The results suggest that future research on lending discrimination should focus on these marginal exceptions to loan policy.

Auto insurance rates can vary dramatically, with much higher premiums in poor and minority areas than elsewhere, even after accounting for individual characteristics, driving history, and coverage. This paper uses a unique data set to examine the relative influence of place-based socioeconomic characteristics (or redlining) and place-based risk factors on the place-based component of automobile insurance premiums. We use a novel approach of combining tract-level census data and car insurance rate quotes from multiple companies for sub-areas within the city of Los Angeles. The quotes are for a hypothetical individual with identical demographic and auto characteristics, driving records, and insurance coverage. This method allows the individual demographic and driving record to be fixed. Multivariate models are then used to estimate the independent contributions of these risk and redlining factors to the place-based component of the car insurance premium. We find that both risk and redlining factors are associated with variations in insurance costs in the place-based component, with black and poor neighborhoods being adversely affected, although risk factors are stronger predictors. However, even after risk factors are taken into account in the model specification, SES factors remain statistically significant. Moreover, simulations show that redlining factors explain more of the gap in auto insurance premiums between black (and Latino) and white neighborhoods and between poor and nonpoor neighborhoods. The findings do not appear sensitive to the individual characteristics of the hypothetical driver. © 2007 by the Association for Public Policy Analysis and Management

Theories of rational redlining suggest a low volume of sales should lead to greater uncertainty in house price appraisals, making the mortgage loan less attractive to lenders. This paper represents the first test of this “information externality” theory using a well-specified model of lending. In our preferred model, information externalities are relevant but the marginal effect diminishes quickly, with only about 10 percent of applications materially disadvantaged by a low volume of sales. Our results also support the presence of bank-level economies of scale to reviewing applications in a given area, with increased bank-level applications associated with higher acceptance rates.

Rather than viewing neighbourhood decline as a natural process resulting from the in-flow of low-income households, this study uses a socio-spatial approach that looks at the structuration of neighbourhood decline by emphasising the power of agents/actors, linking the structure of the real estate industry to the development of the neighbourhood. Landlords and banks are not merely automata of the price mechanism that steer the natural operation of the market, but should be seen as intentionally and unintentionally restructuring the local real estate market and thus possibly producing, or contributing to, processes of neighbourhood decline. This paper presents the Tarwewijk (Rotterdam, the Netherlands) as a case study of neighbourhood decline. Attention is paid to the social and physical decline of the neighbourhood, drug dealing, undocumented immigrants and processes impacting the housing market such as speculation, blockbusting, milking and redlining. It is argued that the retreat of 'formal' actors, such as banks and bona fide landlords, stimulates the rise of the underworld in both the housing and drugs markets.

Redlining research is common practice in the US but not in other countries. Does this imply redlining does not take place elsewhere? This paper presents evidence from Rotterdam, the second largest city of the Netherlands, showing that in the 1990s it was impossible to get a home mortgage in large parts of the city. However, after Rotterdam joined the National Mortgage Guarantee (an institutional control measure) in 2000, hardly any evidence of redlining was found. This paper not only shows that redlining takes place outside of the US context, but also that a (discursive) treatment based on case study research has the possibility to gain a fuller understanding of redlining practices than a statistical/correlation analysis of mortgage data. Interviews with key actors are instrumental to unravelling how, why and when those in power make their decisions: agents are structured by the existing system while, at the same time, some of these agents have the power to re-produce as well as re-structure (transform) the system. One of the geographical outcomes of the agency-structure interaction is that credit is “redirected away from poorer to richer (and therefore “safer”) groups” as part of a strategy of risk avoidance [Leyshon and Thrift, 1997]. Thus redlining, like any other form of financial exclusion, deepens and accentuates prevailing levels of uneven development by creating geographical variations in access to the financial system [Dymski and Veitch, 1992].

The appraisal practices of the Home Owners’ Loan Corporation (HOLC) and its Residential Security Maps are often cited as major contributors to later redlining and the perpetuation of segregation through unequal access to mortgage credit. This article focuses on whether there was a relationship between the HOLC's neighborhood assessments and mortgage outcomes. Our results indicate that the agency was clearly instrumental in restructuring the home finance system and permitting far greater access to homeowner‐ship, but it is important to consider other factors in examining the HOLC's legacy in the reshaping of the mortgage market and the operation of the financial sector after the Great Depression. Specifically, the issue of increasing segregation in older cities in the late 20th century remains inextricably linked to both the shifting nature of real estate finance after the HOLC era and the demographic, economic, and residential changes affecting U.S. cities.

Manuel B. Aalbers, Chichester, Wiley-Blackwell. 2011, 256 pp., £19.99 (pbk) ISBN 9781405196581 This book is about redlining, the place-based exclusion from mortgage finance: Redlining can be redefi...

Since the late 1980s, mutually reinforcing trends in economic growth, public policy, and community activism have fostered a wave of residential mortgage lending to ‘underserved markets’ in US cities. Yet many of the changes in housing finance that supported sustainable home ownership also lured a new generation of subprime and predatory credit institutions specialising in high-cost, high-risk lending. For many urban and minority neighbourhoods, the old problems of exclusionary redlining are now accompanied by new dilemmas of exploitive greenlining. This paper analyses the market penetration of subprime lending institutions and the subsequent concentration of mortgage ‘pre-foreclosures’ in low- and moderate-income, African American neighbourhoods. Focusing on Newark, NJ, and its surrounding suburbs, Gary King's ecological inference technique and a series of logistic regression models are used to assess the role of borrower characteristics, institutional divisions, and neighbourhood context in the process o...

For two generations, urbanists have analyzed how residential mortgage lending reflects and reinforces inner‐city inequality. Yet the basic dichotomies of this literature have been eroded by parallel developments in community organizing, public policy, and restructuring of financial services. Securitization, institutional structure, and increasingly sophisticated market segmentation have altered the relationship between mortgage capital and the inner city, redrawing patterns of exclusionary redlining into more complicated, stratified inclusion into prime and subprime reinvestment flows. In this article, we analyze lending dynamics in neighborhoods at the nexus between gentrified reinvestment and enduring poverty in 23 large U.S. cities. A strong, sustained resurgence of capital investment is woven together with enduring racial‐ethnic exclusion that cannot be blamed on borrower deficiencies. Institutional restructuring and secondary‐market linkages reinforce newer class and racial‐ethnic inequaliti...

Racial profiling has emerged as a highly contentious practice in a range of social settings. This article examines the role of racial profiling in the property insurance industry and how such pract...

This article analyzes the impact of the residential security maps created by the Home Owners' Loan Corporation (HOLC) during the 1930s on residential mortgages in Philadelphia. Researchers have consistently argued that HOLC caused redlining and disinvestment in U.S. cities by sharing its color-coded maps. Geographic information systems and spatial statistical models were used to analyze address-level mortgage data from Philadelphia to determine if areas with worse grades actually had less access to residential mortgage credit as a result. Findings indicate that the grades on HOLC's map do not explain differences in lending patterns with the exception of interest rates, which were higher in areas colored red. Archival material and journal articles from the 1930s also reveal that lenders were avoiding areas colored red before HOLC made its maps, that HOLC's maps were not widely distributed, and that lenders had other sources of information about real estate risk levels.

Using a nationally representative sample of conventional single-family mortgage loans that originated during 1992–1995 with detailed loan pricing information, this paper examines whether interest rates vary by neighborhood income and racial composition. The estimates suggest that borrowers financing homes in low- and moderate-income neighborhoods generally paid 2–4 basis points more for 30-year loans, but there was no difference for 15-year loans. Results by racial composition of the neighborhood were more mixed, with borrowers in predominately Hispanic and Asian neighborhoods paying slighting higher rates, while borrowers in predominately African–American neighborhoods occasionally paid slightly lower rates. Omitted variables could account for some of these differences. Overall, the small effects suggest that redlining is unlikely to be a factor, although no firm conclusions can be drawn.

Unfortunately for IT professionals, e-mail represents only the tip of the iceberg in how legal and regulatory duties will impact IT operations. In addition to privacy issues, regulators and other legal officials have already expressed interest in intruding into data center operations for audits of digital rights management (distribution of copyrighted materials) and taxes. They also want to determine whether e-commerce personalization engines have the impact of illegally redlining users. (Redlining is the illegal practices of a lending institution that denies loans or restricts the number of loans for certain areas of a community. There have also been redlining problems in the insurance industry.) Data centers house information, and information is of critical interest to legal and regulatory authorities. The net result is that IT architecture isn't just about technology any more. The last year's market realities made it clear that everyone must worry about the fiduciary realities of return on investment and total cost of ownership. Now that the rest of the world is catching up, IT architects need to deal with the legal realities imposed by governments and regulatory agencies. It is argued that companies that host e-mail should prepare to cooperate with law enforcement authorities and comply with search warrants or risk having their systems seized and carted away.

Executive Summary. Concerns about fairness in the mortgage markets have motivated a large and growing literature and continues to be a regulatory issue impacting a wide range of financial instituti...

America's housing and mortgage markets are undergoing a dramatic transformation, as urban reinvestment and attempts to tap underserved markets of new homeowners alter historical processes of redlining and discrimination. This article synthesizes findings from case studies of private lenders, lender consortia, and nonprofit community organizations that are active in underserved markets and analyzes the strategies these organizations use to attract and qualify mortgage applicants and retain new homeowners. The case studies reveal a diverse array of strategies designed to address market imperfections related to information, discrimination, and household financial characteristics. Although these strategies expand homeownership opportunities, challenges remain. They reflect inherent tensions between the industry trend toward standardized, efficient business practices and the customized, often expensive programs needed to address the multiple obstacles to homeownership and community development faced b...

Allegations of inner-city insurance redlining are increasingly facilitated through the jurisprudence of “disparate impact,” a legal doctrine holding that a policy or practice based on race-neutral criteria may nevertheless constitute illegal discrimination if it has a disproportionate adverse impact on racial minorities or women. Disparate impact analysis would require insurers to document a precise cause-and-effect relationship between a challenged underwriting variable and its associated risk. Moreover, they would be required to show that no “less discriminatory” risk-assessment technique is available. If it is not possible—or too costly—to meet this burden, insurers will have no choice but to abandon the use of those risk-selection practices and cost-based pricing mechanisms that yield a disparate racial impact. This will result in higher premiums and less insurance availability for consumers. Furthermore, dubious charges of unfair discrimination will exacerbate racial tensions and divert attention from the social and economic pathologies of which insurance costs are merely symptomatic.

Twenty to 30 years after passage of laws designed to eliminate racial discrimination and redlining on the part of mortgage lenders questions regarding race and lending persist. Studies regularly reveal that race and location do affect lending decisions. However, few studies examine variation in approval rates by city size, the impact of location on White and Black applicants, or racial lending patterns in a given region. The present study considers these elements of lending for one major region ofthe United States, the Southeast. Examination ofmore that 600,000 mortgage applications from 15 metropolitan areas throughout the Southeast reveals sharp disparities in mortgage approval rates between Black and White applicants. For all cities in the region Whites were more likely to gain lenders' approval than Black applicants, even when controlling for income and loan amount, although there is considerable variation among cities in the degree to which Whites fare better than Blacks. The data reveal that city size affects approval rates of Blacks but not of Whites. Furthermore, Whites seeking loans of up to $100,000 in minority areas are less likely to receive them than are Blacks requesting similar loan amounts. Also, lower-income Blacks requesting small loans for houses in minority areas are more successful than lower-income Blacks requesting small loans for dwellings in White neighborhoods. The results ofthe study point to a need for greater efforts on the part ofthe lending industry to invest in minority areas and to provide Blacks with increased opportunities for home ownership and the associated process ofcapital accumulation. Passage ofthe Home Mortgage Disclosure Act (HMDA) in 1975 provided the first opportunity to examine patterns ofmortgage lending on a widespread basis. The Act and its 1989 amendments require most lenders to report a variety ofstatistics about loan applicants. These include the applicant's race, the loan amount requested, the applicant's income, the census tract in which the desired property is located, and the action taken on the application. With these data one may examine aggregate statistics related to general lending patterns in urban areas, analyze patterns based on race vis-a-vis income and loan amount requested, and study spatial variation in lending as related to poor/minority areas versus well-to-do, predominantly White areas. The issue of spatial variation is important given passage of the Community Reinvestment Act (CRA) of 1977. While the Fair Housing Act (1968) and the Equal Credit Opportunity Act ( 1974) prohibit racial discrimination by lenders, the CRA requires that lending institutions meet the credit needs of the entire community, including low-income neighborhoods. The bill was enacted because ofconcerns on

In 1988, the Atlanta Journal‐Constitution published “The Color of Money,” an influential series examining mortgage redlining in Atlanta. The articles documented wide lending disparities between white and black neighborhoods of similar income levels. Given sweeping changes in housing finance since 1988, we seek to determine whether Atlanta's racial geographic disparities in mortgage lending have changed. Analysis of 1992 to 1996 Home Mortgage Disclosure Act data reveals slight improvement. Atlanta's depository lenders made 4.2 times as many conventional home purchase loans per owner‐occupied unit to middle‐income white neighborhoods as they did to middle‐income black neighborhoods; a decade earlier, this ratio was 5.2. Nondepositories post lower ratios, particularly for Federal Housing Administration‐insured loans, but this market segment raises concerns because of potential abuses. By the indicator of most enduring theoretical and policy interest—conventional home purchase lending by depositories...

Following G. Becker's (1993) suggestion that tests for discrimination should attempt to infer whether profits differ for products sold to minorities and nonminorities, this article tests the hypothesis that racial discrimination affects market prices of auto insurance in Missouri. Compared with tests for discrimination in lending markets, the authors' results are less susceptible to bias from omitted variables. Controlling for available demographic and coverage-related factors, they do not find that loss ratios at the zip-code level are negatively related to percent minority population. This finding is inconsistent with the hypothesis that racial discrimination increases premiums relative to expected claim costs for minorities. Copyright 1998 by University of Chicago Press.

Using canonical regression analysis, the paper examines the associations between housing conditions, race, poverty and vintage structure age in Cleveland, Ohio's east and west sides. It is found that African-Americans are concentrated in the oldest at-risk housing stocks on Cleveland's east side, but chronic poverty rather than quality deficiency is most associated with their presence. On the west side, the oldest housing stock is experiencing the most deterioration, but a linkage between race and at-risk vintage units is not established; rather, chronic poverty is directly associated with age depreciation. Lastly, in examining the effects of housing conditions, race and mortgage lending, it is found that credit access has little to do with race; rather, housing conditions and the age-depreciation process most affect credit receipt and operate independently of race.